KEY POINTS:
Chip maker Mr Chips' September half-year net profit increased threefold to $1.33 million and it is on track to repeat the performance in the second half.
Chairman Graeme Edwards yesterday took a shot at local and central government, saying virtually every impediment to exporting came from them.
"While the domestic market remains healthy, our growth is principally a result of increased exports to Australia and this means we are increasingly exposed to the exchange rate," he said.
"It is ironic that despite the Government contemplating moves to encourage exports most of our difficulties are the result of government policies.
"Increased energy and labour costs are being directly driven by central government, rates and trade waste charges by local government.
"Together with high interest rates and the resulting exchange rates these imposts are simply unsustainable for exporters."
Government intentions to further lift minimum wages would have an adverse impact, although automation of packaging would mitigate that.
He said the company was budgeting that recent gains would be maintained for the full year and the following year.
Mr Chips' pre-tax half-year profit rose fourfold to $1.99 million from a year ago.
Sales increased by 20 per cent to $22.4 million mainly due to strong organic growth from its East Tamaki plant commissioned in 2002.
Edwards said the company had reached a stable critical mass "we are not prepared to gain sales at unrealistic prices".
The narrowing of its debt-to-equity ratio to 54.3 per cent meant it was able to resume payment of dividends.
It will pay an interim 3.5c per share dividend on December 22.
Edwards said the sharp turnaround in profit has been achieved by increased gross margins, largely as a result of the increased sales, good use of a new coldstore and a more favourable Australian-NZ dollar exchange rate, at least temporarily.
"While the recent bounce in the exchange rate is of concern we have a hedging programme in place that affords good protection for the next production season."
Mr Chips shares closed up 4c yesterday at $1.04.
- NZPA
